It’s not surprising to me that Robo Advisers are starting to report an increase in female investors, just as the broader industry tries to recruit more women to financial planning.
The finance industry has been trying to attract more women to products for some time now, and that effort appears to be paying off in the automated space.
According to a report in the Sydney Morning Herald, Six Park and Stockspot, both of which deliver financial advice online using algorithms and technology, have seen a significant increase in accounts held by women since the start of this year.
But is this because of targeted marketing, improved access to technology and women becoming more financially empowered and investment savvy or is the industry shortage of female advisers playing a part?
It’s a question I put to AFA Female excellence in advice winner Donna Lee Powell principal financial adviser at DLP Life Design.
“I believe robo advice has been so popular for women recently because as a profession we do not have enough female advisers for women to be able to seek quality holistic advice, they often do not feel as comfortable to talk about money with our male colleagues.”
I suspect the answer is most likely a combination of all of the above.
So what does the future hold?
It’s good news for female investors because robo advice is a cheaper solution to traditional strategic advice.
But not every woman is going to like the idea of not speaking to a financial expert as they hand over their money.
A new survey from the United States released by financial services firm Charles Schwab found that 86% of 1,000 respondents said they still want to be able to interact with a person.
The survey also found that 58% of Americans said they will be using robo advice on a regular basis by the year 2025, while less than 50% said they prefer human help over automation for even routine daily financial tasks.
Lee Powell believes robo advice has a place, but she’s concerned about education and the lack of understanding that some women have around investment markets and how they work
“I often see women struggle with investing concepts so my concerns with robo advice is that you will have women investing in these platforms who don’t understand how investment markets work.
“Investing through robo advice is only one aspect of what financial advisers do to help women create wealth.
“Without the support of an adviser to explain essential fundamentals to investing, such as market volatility, risk versus return trade off, different asset classes available to invest in and diversification, there may be an educational gap for some investors which could result in loss of wealth.”
Which types of women are likely to benefit from robo advice?
“Robo advice will suit some women, particularly those who are financially educated and have a genuine interest in investments,” says Lee Powell.
“Robo advice won’t suit those who aren’t financially savvy and who need to invest with someone they trust and have a personal connection with to guide them before making investment decisions.
“Women who are not driven financially are often not concerned about investments as such, rather their motive behind wealth creation is usually related back to how wealth can improve their family life or lifestyle.
“It’s not always just about making money or investment returns. This is where robo advice would let those types of women down because it is purely focused on financial gain and investment not linked to the client’s individual drivers.”
“I think it is very important to empower women to take charge and robo advice does have a place, especially for younger women or those who can’t afford to pay for strategic advice.
“Robo advice is cheaper and it allows them to have the exposure to markets than they may otherwise not have had,” says Lee Powell.
If you have clients who are interested in robo advice, take the time talk to them and given them the choice. Ask if they want to have the control, responsibility and make the investment decisions to complement the other strategic side of your services. At the same time be there to educate them to help build their confidence and awareness around investing.
Bianca Hartge-Hazelman writes on women’s money matters and is the publisher of Financy and The Financy Women’s Index
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